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May 2020
Small Multifamily Units
Housing Finance Policy Center
Summary
Almost 25% of rental units are in 2-24 unit structures, but there is a lot of
geographic variation.
Many of these structures tend to be located in core metro areas, disproportionately
in lower income tracts.
Owner occupied landlords of small multifamily units have lower income than single
family homeowners, and they are more likely to be people of color.
Investors in 1-4 unit properties tend to have higher incomes than their owner-
occupied counterparts, but purchase lower priced homes.
Renters in small multifamily tend to have lower incomes, pay less in rent, be more
heavily people of color, and be more in industries exposed to COVID-19.
Housing & Location Characteristics
4
13% of Rental Units are in Structures with 2-4 Units; another 10% in Structures with 5-24 Units
Source: 2018 RHFS
17,122
6,160
994
3,6432,712
16,439
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1-unit 2-4 units 5-9 units 10-24 units 25-49 units 50+ Units
Number of Rental Units (in 1,000)
36.4%
13.1%
7.7%5.8%
36.4%36.4%
34.1%
2.1%
Total: 47.0 million rental units
5
Mortgage Debt Rises with the Number of Units in the Structure
Source: 2018 RHFS
36.4%
13.1%
7.7%5.8%
36.4%36.4%
34.1%
2.1%
39%
53%
57%
62%
67%
74%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1-unit 2-4 units 5-9 units 10-24 units 25-49 units 50+ Units
Rental Property with Mortgage (%)
6
Majority of SF Investors Own Few Properties; Individual Investors are the Most Prevalent in 2-4 Units
Source: 2015 RHFS
36.4%
13.1%
7.7%5.8%
36.4%36.4%
34.1%
2.1%Source: 2017 Investability
60.2%
18.8%
8.2%6.1%
2.6% 1.7% 1.4% 2.6%
0%
10%
20%
30%
40%
50%
60%
70%
1-2 3-5 6-10 11-25 26-50 51-100 100-250 >250
% of Investors in SFR by Number of Owned Properties
75% 77%
38%
19%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1 Unit 2-4 Units 5-24 Units 25-49 Units 50+ Units
% Rental Properties Owned by Individual Investors
7
Small Multifamily Structures are more likely to be in Core Metro and Low-Income Neighborhoods than 1-unit structures
Source: 2018 ACS
36.4%
13.1%
7.7%5.8%
36.4%36.4%
34.1%
2.1%
13.0%
29.6%
24.6%
21.7% 21.4%
32.3%
41.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1 Unit 2 Units 3-4 Units 5-9 Units 10-19 Units 20-49 Units 50+ Units
% Units in Core Metro
17.0%
45.1%
54.6%
48.9% 48.9%47.0%
0%
10%
20%
30%
40%
50%
60%
1 Unit 2 Units 3-4 Units 5-24 Units 25-49 Units 50+ Units
% Properties In Census Tracts Below 80% AMI
Source: 2018 HMDA
8
Smaller Structures are Older than Larger Structures; 2-unit structures are the oldest
Source: 2018 ACS
36.4%
13.1%
7.7%5.8%
36.4%36.4%
34.1%
2.1%
64.1%
72.8%
61.5%
51.1%
46.6%50.5%
47.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1 Unit 2 Units 3-4 Units 5-9 Units 10-19 Units 20-49 Units 50+ Units
% Built Before 1980
5.64
4.77
4.153.88
3.683.45
3.26
0
1
2
3
4
5
6
1 Unit 2 Units 3-4 Units 5-9 Units 10-19 Units 20-49 Units 50+ Units
Average Number of Rooms
Source: 2018 ACS
9
Share of 2-19 Rental Units Varies by MSAs (Top 20 Most Populous MSA)
Source: 2013-2018 ACS
36.4%
13.1%
7.7%5.8%
36.4%36.4%
2.1%
MSA 1 Unit 2 Units 3-4 Units 5-9 Units 10-19 Units 20-49 Units 50+ Units 2-19 units
Boston-Cambridge-Newton, MA-NH 13.8 15.6 20.2 12.1 10.2 11.3 16.8 58.1
Chicago-Naperville-Elgin, IL-IN-WI 22.7 11.0 14.9 16.9 9.2 8.5 16.9 51.9
St. Louis,MO-IL 38.5 8.9 14.8 12.9 10.1 4.8 10.0 46.7
New York-Newark-Jersey City, NY-NJ-PA 10.5 13.4 12.4 9.5 9.1 17.0 28.2 44.3
Dallas-Fort Worth-Arlington, TX 30.6 2.8 7.5 14.9 18.8 10.6 14.9 44.0
San Francisco-Oakland-Hayward 27.9 6.6 12.2 11.7 11.5 12.1 18.0 42.0
Tampa-St. Petersburg-Clearwater, FL 38.2 5.4 8.8 12.0 15.0 8.9 11.7 41.2
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 37.0 10.5 10.5 9.4 10.3 7.2 15.1 40.7
Houston-The Woodlands-Sugar Land, TX 30.5 2.3 5.9 11.7 20.7 10.5 18.5 40.6
Los Angeles-Long Beach-Anaheim, CA 29.1 4.0 10.4 13.3 12.7 13.8 16.7 40.4
San Diego-Carlsbad, CA 34.2 3.3 9.1 14.3 12.8 10.1 16.2 39.5
Seattle-Tacoma-Bellevue, WA 28.5 4.4 8.2 12.3 14.3 12.6 19.8 39.2
Washington-Arlington-Alexandria, DC-VA-MD-WV 27.5 1.9 4.8 11.1 21.4 6.4 27.0 39.2
Atlanta-Sandy Springs-Roswell, GA 40.8 3.3 6.0 12.9 15.9 9.4 11.8 38.0
Detroit-Warren-Dearborn, MI 43.8 4.5 7.2 14.9 10.4 5.9 13.3 37.0
Miami-Fort Lauderdale-West Palm Beach, FL 29.5 5.0 8.5 10.3 13.3 14.3 19.2 37.0
Phoenix-Mesa-Scottsdale, AZ 43.8 2.4 8.7 11.4 13.4 6.9 13.4 35.9
Denver-Aurora-Lakewood, CO 30.7 2.8 5.8 10.3 16.8 15.9 17.8 35.7
Riverside-San Bernardino-Ontario, CA 51.8 3.6 10.1 11.3 8.9 4.9 9.3 34.0
Minneapolis-St. Paul-Bloomington, MN-WI 25.6 5.6 5.1 5.9 11.0 18.0 28.8 27.6
Landlord & Tenant Characteristics
11
Owner Occupants of 2-19 Unit Properties have Relatively Lower Income
36.4%
13.1%
7.7%5.8%
36.4%36.4%
34.1%
2.1%
Source: 2018 ACS
But this might not be the case for more recent purchases
Source: 2018 HMDA
1 Unit 2 Units 3-4 Units 5-9 Units 10-19 Units 20-49 Units 50+ Units% Household with a Mortgage
64.4% 60.7% 61.0% 62.0% 58.6% 53.0% 49.0%Median Household Income ($)
All 81000 70000 63900 63100 61000 66000 81600With Mortgage 94300 83300 75000 74000 72000 81300 100250
% Households with Household Income Below 80% AMIAll 27.2% 40.1% 42.9% 43.0% 45.2% 42.3% 36.8%
With Mortgage 19.9% 31.9% 34.8% 34.8% 37.4% 33.0% 26.0%
1 Unit 2 Units 3-4 UnitsPrimary Investor Primary Investor Primary Investor
Median Income 80000 121000 80000 117000 87000 130000
12
Investor Properties Have a Lower Market Value than Owner Occupied Properties with Similar Borrower Characteristics
Source: eMBS January 2018-March 2020 OriginationNote: We have shown the median value for FICO, DTI, Orig. UPB, LTV and Implied Property Value.
36.4%
13.1%
7.7%5.8%
36.4%36.4%
34.1%
2.1%
Freddie Mac & Fannie Mae Ginnie MaeOwner-Occupied Investors Owner-Occupied
1 Unit 2 Units 3-4 Units 1 Unit 2 Units 3-4 Units 1 Unit 2 Units 3-4 UnitsNum. Loans 7320773 60020 14290 485089 56745 31973 4459193 62143 16431FICO 753 748 748 765 762 761 676 691 704DTI 37 41 42 38 38 37 42 46 46Orig. UPB ($) 233,000 290,000 365,000 152,000 165,000 251,000 207,000 260,000 297,000 LTV 80 75 72 75 75 71 96.5 96.5 96.5Implied Property Value ($) 309,524 451,689 599,468 224,242 246,154 380,000 223,368 279,822 315,030%LTV>80 35.17% 23.21% 13.21% 3.71% 0.47% 0.41% 88.04% 88.25% 90.18%Num LTV>80 2574862 13930 1887 17998 268 132 3925759 54843 14817
13
In a Greater Share of 2-4 Structures, Landlords are People of Color and Immigrants
Source: 2018 ACS
1 Unit 2 Units 3-4 Units 5-9 Units 10-19 Units 20-49 Units 50+ UnitsAll HomeownersRace Ethnicity
White 76.0% 58.6% 66.1% 72.4% 72.1% 72.6% 68.1%Black 7.9% 15.5% 9.9% 7.2% 7.3% 5.5% 6.4%Hispanic 9.6% 16.1% 13.1% 9.4% 9.2% 10.7% 11.1%Asian 4.6% 7.9% 8.6% 8.5% 9.3% 9.1% 12.4%
Immigrant 15.0% 37.0% 30.3% 24.6% 25.9% 28.5% 33.9%Homeowners with MortgageRace Ethnicity
White 74.4% 54.8% 62.7% 70.2% 69.4% 67.7% 63.9%Black 8.4% 16.5% 11.7% 8.5% 8.4% 6.9% 7.7%Hispanic 10.4% 18.6% 14.0% 9.7% 10.3% 11.8% 12.1%Asian 4.8% 7.8% 9.0% 8.3% 9.4% 11.0% 13.8%
Immigrant 15.7% 39.9% 31.4% 23.2% 24.0% 28.5% 33.0%
14
Renters in 2-4 Unit Structures have Relatively Lower Income, Pay a Lower Rent, and are In Industries More Vulnerable to COVID -19
36.4%
13.1%
7.7%
36.4%36.4%
34.1%
Source: 2018 ACS
1 Unit 2 Units 3-4 Units 5-9 Units 10-19 Units 20-49 Units 50+ UnitsMedian Household Income ($) 47400 36800 35000 36000 39500 37500 36000Percent Below 80 AMI 50.3% 63.8% 66.8% 65.2% 64.0% 65.2% 63.6%Gross Rent ($) 1090 930 940 970 1030 1070 1180% In Vulnerable Industries 30.9% 35.3% 33.5% 32.8% 30.7% 31.7% 26.1%
15
Greater Share of 2-19 Unit Renters are People of Color and Immigrants
Source: 2018 ACS
36.4%
13.1%
7.7%5.8%
36.4%36.4%
34.1%
2.1%
1 Unit 2 Units 3-4 Units 5-9 Units 10-19 Units 20-49 Units 50+ UnitsRace Ethnicity
White 55.8% 50.2% 48.1% 47.2% 46.3% 49.3% 51.8%Black 18.2% 21.6% 21.4% 22.8% 23.3% 18.5% 19.0%Hispanic 19.0% 20.9% 21.9% 20.4% 19.9% 21.3% 16.3%Asian 3.7% 4.3% 5.1% 6.1% 7.1% 7.6% 9.8%
Immigrant 24.1% 31.8% 33.3% 34.1% 39.2% 40.1% 36.6%
